Some Afternoon Amusement Courtesy Of RBS: There Is No Spoon - Or Bank Run

We were pleasantly surprised earlier today when we discovered that the "head of European rates" at RBS, or as it is better known in the US as CRT LLC (see here, here and here), Harvinder Sian, not only sends out mollifying notes to clients with extended references to "excitable" blogs such as Zero Hedge, but that apparently cost-cutting measures have forced RBS to cancel their over-budget Dow Jones wire service.

Our good friends at Alphaville, who it turns out are the first and last (and also somewhere in the middle) to diligently comb through RBS research, point out this amusing note that was sent out earlier (emphasis from the original):

The Greek rumour mill today centres on risks for the banking sector. The website Zero Hedge carries a rather hysterical story that “Greeks Scramble To Pull Out €8 Billion From Local Banks As Greece Responds With Money Control Measures”.

The central point of the article is that private bank customers have
pulled €8bn out of Greece in a combination bank accounts, stock sales,
property sales and other sources. It then asserts (wrongly, see below)
that this is a ‘plain vanilla run on the bank’.

Let’s walk through it . . .

IS THIS TRUE?

The quotes attributed to private bankers (€8bn outflow etc) are not
sourced but that is usually the case. We have heard of some ship owners
for instance moving assets to Cyprus and Switzerland too, so this part
of the story is not far fetched. The key point however is not the health of banks here but that the money and asset transfers are A MOVE TO AVOID HIGHER TAXES.

So, just in case you missed the point (it also appears that cost-cutting has also eliminated double underlining of text when trying to overemphasize a point) the premise is that there is no bank run, and it is all done to avoid taxes. Get it?

Ok.

So, let's go back to the original Dow Jones article which we sourced, and which RBS apparently did not have access to:

Once again, for the government-subsidized seats, it starts off as follows:

Wealthy Greeks have moved around EUR8 billion out of local banks in the past three months fearing a possible new tax on bank accounts, increased government scrutiny on assets and a run on the banks if Athens is forced to turn to the International Monetary Fund, according to private bankers and other people with knowledge of the situation.

So yes, while CRT's RBS' CAPS LOCK FULLY BOLD TEXT would like to draw your attention to one component of the gentle and timid withdrawal of €8 billion in deposits, two of the other considerations would tend to imply that there may be something more to this than the bank which is allegedly loaded to the gills with PIGGS exposure would want you to believe.

Continuing with the Dow Jones' own quotes, the agency quotes several people who seem to have a slightly less sanguine opinion on matters:

"There is a lot of uncertainty out there," said a senior private banker at a Greek bank.

Hmm.

"We've had a number of customers asking to move funds out of Greece, mostly to Cyprus, Luxembourg and Switzerland."

Oops.

"We estimate that EUR8 billion has moved out of Greece to accounts abroad since December. It's money from bank accounts, stock sales, property sales and other sources. This is pretty substantial considering that there is only EUR30 billion under management in private banks here"

Oh crap.

"Some of our clients are concerned about a run on the banks if the IMF gets involved," said another private banker, this one from a foreign bank. "They believe the situation in Greece will get worse before it gets better. There is also very little clarity from the government about its intentions on new tax measures."

Of course, RBS would never see a scenario in which the IMF would get involved (despite extended "technical" IMF delegations on the ground currently), and thus precipitate the gating factor for what Greece-based finance professionals, who, with all due respect, have just slightly more credibility than analysts at conflicted semi-nationalized banks. Lest we forget, a recent back of the envelope analysis indicates that the UK (which incidentally is a 70.33% holder of RBS) has quarter of a trillion pounds exposure to the PIIGS, of which no matter how you spin it, Greece will be the first domino. So yes, we tend to take any RBS analysis with just a little shaker of salt. And what an analysis it is:

IMPLICATIONS FOR BANKS FROM THIS MONEY/ASSET MOVE?

Very little. Let’s start off by saying that Greece has a sovereign debt problem that is hitting the banks.
The banks themselves started the crisis in fairly robust condition and
to date there is absolutely NO EVIDENCE OF A DEPOSITER [SIC] RUN.

Yet going back to the top, keep in mind that RBS' primary observation is that all the money moves over the past three months have been done in order to AVOID HIGHER TAXES. We seem to have a slightly pedantic, if undergraduate, understanding of Einstein's Theory of Relativity as pertains to time travel, but it does strike us a little perplexing from a purely chronological perspective how Greeks in December and January could have been pulling money in advance of such notification. Namely:

Finance Minister George Papaconstantinou earlier this month [as in February] urged Greeks with accounts abroad to repatriate their money and said the capital will be taxed at a 5% rate. He said those who choose to keep their money abroad should declare their deposits and pay a tax of 8% for the first six months. Thereafter he threatened that Greece will use all laws at its disposal, such as double-taxation agreements, to ask foreign banks for information on Greek account holders.

And just to get the Greek perspective, instead of the 70.33% point of view of the UK, here is the last relevant bit from Dow Jones:

"For us this is the first step towards taxing all accounts in Greece," said the chief financial officer of a major Greek shipping company. "The line is minimum deposits here and moving all assets abroad." "Money will flow back into Greece when the situation returns to normal. This won't happen for at least a year and there is not a lot of trust for the Greek banking system right now," he added.

We are confident that with RBS' amazing approach to chronology they should now be able to go back in time and advise themselves on how to avoid listening to their own advice, and instead of going bankrupt, pardon, being bailed out, and arguing over semantics, continue to grow and flourish, without making the the UK taxpayer just 70.33% pregnant with a morass of toxic assets.

We will, however, acknowledge, that our estimate of money multiplier effects on deposits was grossly exaggerated. Obviously, the full impact of €8 billion in deposits getting withdrawn via fractional reserve multiplication would be vastly more substantial only in a world in which Central Bankers, such as Mr. King, were not engaged in gross monetary policy manipulation. We do stand corrected by RBS' much more practical realization that courtesy of QE (which in England, it appears, will be extended shortly after the economy confirms it has relapsed) and excess reserves, two concepts which have so far allowed RBS to survive whereas othersie Mr. Sian and all his colleagues would have long been unemployed, the money multiplier collapses, and in countries such as Greece and the UK, central bankers are happy if it stands at anything above 1.

Which is why, just like RBS, we urge our readers to completely ignore the fact that an €8 billion bank run kind and nurturing deposit withdrawal in a country of 8 million is anything even barely relevant, and if possible, please, PLEASE, not only read much more RBS research, but any time that an CRT RBS fixed income salesperson calls and offers to offload some of the bank's inventory of PIIGS bond holdings, that you should do so with no questions asked.

First they deny your existence (ZH), then they begin to criticize & cast doubt, then they mount counter attacks, then you eat their lunch as they fade away into oblivion. Standard operating procedure. Disregard them...

Not to support RBS, but "according to private bankers and other people with knowledge of the situation" and "a private banker" in the Dow Jones articles is not sourcing. Their version is certainly plausible, but no "proof" is offered.

Maybe you could clarify: Is the Greek finance minister referring to taxing the interest and/or capital gains on the accounts or the principal of the accounts? Principal is how I am understanding it. Sounds like Argentina.

He took little Suzie to the Junior Prom Excitable boy, they all said And he raped her and killed her, then he took her home Excitable boy, they all said Well, he's just an excitable boy After ten long years they let him out of the home Excitable boy, they all said And he dug up her grave and built a cage with her bones Excitable boy, they all said Well, he's just an excitable boy

Hysterical and excitable? Words from someone who only eats Kibbles & Bits. These people have never been locked into a blog about gold here: knives and spears only, check firearms at the door. And if one thinks they know something about bonds, give a try at a comment here. There are bloggers here who know what is going on. They may speak in a funny way, at times even condescending, but they give everyone a chance to make a mistake in thought. So, RBS, grow some nuts and jump on in, no reservation needed. Ass bags available at the exit.

Yep they hold a LOT OF PAPER - most of it bad and purifying.
Now tell me again how good they are at making profits on a taxpayer freebie. But OH YES we HAVE to have a billion or two for bonuses to ensure we can make more losses for the taxpayers. We are so good at our jobs we can singlehanded and blindfolded run a company and the truth to ground in less time than it take to light a Cuban cigar.
Please Scotty beam me up - this planets about to go to critical mass.

This is the new, newer and / or newest Tea Baggers party push? The reason that these type of events have very little affect... is because there is no real position being pushed... to be yet more clear, the events lack substance... stay home and smoke weed and / or go to Church and pray for the end crap... either way or any variation of is weak... and I have been exceedingly kind.

How about a push for a law that requires “AAA” rated corps who have consumed cheap money at the expense of the tax payer… not be allowed to Lobby in any form the U.S. Government… The Tax payer should not pay for the Corporations Lobby against the Tax Payer… how about a something everyone can get behind and support beyond the typical “I know you are… But what am I?” Banter of blue collar verse other… the middle is stupid… the middle Voted for change and got Lobby part Duex… so what would make the largest change and have immediate effect? Kill off the Lobby… it serves almost everyone’s best interests… Oops? No more $10,000 dollar coffee brunches for the Congressional Crooks and Scumbag Senate members?

Many have called, faxed, e-mailed etc their gov reps about various topics such as the bailout. Overwhelmingly against things and guess what.

RESULT: They CONgress still passes this junk. Not a darn thing has changed or has been done. Banksters still get bonuses and no one goes to jail for anything. Everyone from Pelosi and her nice newish LARGE plane to the parties in Global Change that cost taxpayers millions to the HUGE waste of private Haliburton contractors in Iraq making HUGE profits, etc, etc and plenty more etc.

ACTION: Go to strike April 15 to 18. Grind the entire USA to a halt lock, stock and barrel.

Once they US Gov realizes what is going on and the action to strike at a moment's notice can easily happen again, perhaps THEN it will be time to talk terms and conditions. Nothing else seems to be working. If you have a better idea go ahead and post it.

A jobless recovery is when the USA's central bank, the Federal Reserve, prints up lots and lots of US dollars and gives them to a small group of very big banks. Closely following that, this same central bank prints up even more dollars and gives them to the US Treasury in exchange for little pieces of paper.

Thx deadhead. Just wanted to shout out loud how completely and totally idiotic our society has become. The lack of intelligence in this particular generation(s) of our race is simply breathtaking. BTW, Miles has a nice take on this in the comment below.

GG - A jobless recovery is an economic state where the renumeration pool grows at a geometrical rate for fewer employees within the member institution structure of the federal reserve system while stating that personal and corporate tax receipts are drastically lower due to the dire condition of the same institutions requiring greater burden sharing with the rest of society.... Leading to this condition of "shared sacrifice" as defined by those that define which aspects of our economy are really important. Their own. In other words, a jobless recovery is a condition wherein society learns who is supposed to meet whose needs, through coercion. So, express a little gratitude to those that have managed to "save" their world at our expense. After all, they are telling us that they are doing God work. So kneel, kiss the ring and be grateful you are so privileged as to have this rare opportunity....

I notice some graffiti on the RBS sign which reads "Thieves". But RBS are not thieves nor are they thievin'. RBS asked the governments for free monies from the taxpayor. The elected government communists then gave RBS the free monies. Receiving free monies from the government is not a crime. Dont like it?Then dont vote communists.

The BOE, just like the Federal Reserve Board of Governors is neither elected by or answerable to the public or its elected representatives. Yes, Hopkins is not supervision. The central banks are super national organizations empowered to print, tax, appropriate, regulate and dispose of whatever it chooses.

Actually, with the UK as a nation being 70%+ shareholders of RBS I must deduce that whatever RBS's PR department puts out is just another avenue for the BOE, the Chancellor of the Exchequer and indeed the Prime Minister to communicate official policy decisions. Just as I deduce that whatever AIG does or says is official policy of the Federal Reserve Board of Governors, the Treasury Department and the President of the United States.

Thanks to the good folks at RBS I now have a fuller appreciation for the UK's term; "being made redundant". I have to wonder what this jobs program at RBS, Lloyd's, Northern Rock and the rest of The City will end up costing whomever (The Federal Reserve) ends up absorbing the loses of the UK financial & sovereign debacle...

despite your efforts to provide the US financial space with some "quality" information, it seems nobody at the large broker / dealers gives a sh.t about the implications you are offering to the reader - and that is your regular "the world is going under" syndrom. S&P trading at 1100, all other markets up more than 50 % from their lows last year. Are you paid by Wall Street to produce "short covering victims" on this site ? From a trading point of view, you seem to be a rookie !

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